Address cost disparities

Sunday

Dec 27, 2009 at 12:01 AM

Throughout the protracted debate over reform of the nation’s health care system, the Dartmouth Atlas of Health Care has served as a statistical polestar: a comprehensive, reliable source of information about the cost of Medicare services. The Dartmouth numbers make it clear that health care is more expensive in some parts of the country than in others. In some markets, the per-capita cost of Medicare is three times what it is in Oregon, a low-spending state. People representing some high-spending areas and hospitals are now saying that the Dartmouth figures miss an important aspect of the story — but the disparities are too wide to be explained away.

A Dec. 23 New York Times story focused on Ronald Reagan UCLA Medical Center in Los Angeles, which prides itself on an aggressive approach to patient care — patients can expect to see many medical specialists and receive a variety of treatments. As a result, the Dartmouth atlas reports that the UCLA Medical Center spent $93,482 during the final two years of the life of each Medicare patient who died in the hospital. That places it in the 90th percentile of hospitals nationwide.

McKenzie-Willamette Hospital, in contrast, spent $36,077. Sacred Heart Medical Center (the statistics are from 2006, before the hospital at RiverBend opened) spent $40,061. Both hospitals’ national rankings, which include factors other than total spending, were in the 4th percentile.

The Times article pointed out that the Dartmouth statistics say nothing about Medicare patients who did not die. An accurate picture of both cost and effectiveness of treatment, UCLA Medical Center spokesman said, would have to take into account patients who benefited from courses of treatment that might not have been pursued at other hospitals. Researchers at UCLA Medical Center and other California hospitals examined all patient outcomes, and concluded that the cost disparities among hospitals are narrower than the Dartmouth statistics show.

This finding has broad implications. By some estimates, if the practices of low-cost hospitals were adopted nationwide, the savings would amount to $700 billion a year — enough to pay for the House or Senate health reform plans seven times over. The prospect of such savings is well understood in Washington, D.C. The Times story quoted White House Budget Director Peter Orszag as saying, “We can no longer afford an overall health care system in which the thought is that more is always better, because it’s not.” If the California researchers are right, more may in fact be better.

Yet even if the Dartmouth figures show only part of the picture, the disparities are plain. During their last six months of life, patients treated at UCLA Medical Center spent 18.5 days in the hospital and saw doctors 53 times. More than half saw 10 or more physicians, and 43 percent died in the hospital. During the last six months of their lives, patients treated at Sacred Heart spent eight days in the hospital and saw doctors 20 times. Only 29 percent were seen by 10 or more physicians, and 37 percent died in the hospital. McKenzie-Willamette’s numbers are even lower.

UCLA Medical Center, as a first-rate institution, presumably sees more patients with complicated and hard-to-treat conditions. Yet other hospitals in the Los Angeles area have comparable costs and report high treatment intensities. No Los Angeles hospital comes close to the low costs and conservatism of treatment found in the Eugene-Springfield hospitals.

There may be factors that explain the wide geographical disparities in per-capital Medicare costs — disparities that presumably extend to other patients as well. But the disparities are real: Medical care cost containment is a more urgent mission for some parts of the country than for others. National health care policy must take that fact into account.

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